The characters Neytiri, voiced by Zoe Saldana (right), and Jake, voiced by Sam Worthington, in a scene from ‘Avatar’. Director James Cameron announced plans to shoot and produce the next three ‘Avatar’ sequels largely in New Zealand.

New film hubs test Hollywood Tax breaks luring filmmaking talent

LOS ANGELES, Dec 28, (AP): In the old days, filmmakers flocked to Hollywood for its abundant sunshine, beautiful people and sandy beaches. But today a new filmmaking diaspora is spreading across the globe to places like Vancouver, London and Wellington, New Zealand. Fueled by politicians doling out generous tax breaks, filmmaking talent is migrating to where the money is. The result is an incentives arms race that pits California against governments around the world and allows powerful studios —with hundreds of millions of dollars at their disposal— to cherry-pick the best deals. The most recent iteration of the phenomenon came earlier this month when James Cameron announced plans to shoot and produce the next three “Avatar” sequels largely in New Zealand. What Cameron gets out of the deal is a 25 percent rebate on production costs, as long as his company spends at least $413 million on the three films. “There’s no place in the world that we could make these sequels more cost effectively,” says producer Jon Landau. It is neither the archipelago’s volcanoes nor its glaciers that are attractive, because the “Avatar” movies will be shot indoors. Sure, Peter Jackson’s award-winning special effects infrastructure is there, but the deciding factor was the money. “We looked at other places,” says Landau. But in the end, “it was this rebate.”

In exchange, the local economy will benefit hugely, Landau says, comparing the ripple effect to the boost that comes from new home construction. “We’re doing lumber, we’re catering for hundreds of people a day. We’re housing people in hotels. We’re going to a stationery store and tripling their business in a year.” The deal was “the best Christmas present we could have possibly hoped for,” says Alex Lee, an Auckland, New Zealand-based entertainment lawyer. The news is especially welcome because the local screen industry is facing a potential drought: The Starz pay TV series “Spartacus” finished this year and Peter Jackson’s “The Hobbit” trilogy is set to wrap next year. Thanks to the “Avatar” sequels, the 1,100 workers at Weta Digital Ltd., the ground-breaking digital effects house Jackson co-founded in 1993, can keep plugging away through 2018. “It would have been a real shame if we had lost any of that talent and they had to move to follow the films,” says Wellington Mayor Celia Wade-Brown.

Trend
Driving the trend are powerful global forces squeezing the entertainment industry. Falling DVD sales are putting pressure on movie-making budgets, while the demand for ever-more-amazing special effects grows. The spread of technology and skills around the world is creating a huge number of special effects suppliers — some using cheaper labor than can be found in Hollywood.
Government largesse has helped create mini-moguldoms in Vancouver, Montreal, London, New York and Wellington, all of which are aggressively one-upping each other to become the next new hotbed of activity. As the work spreads, branch offices of visual effects companies have opened up in new locations. Even though digital work is borderless, workers must live and be paid locally to generate the income taxes and spending that governments seek.
The tax incentives race is destined to accelerate next year. State incentives in California — home to “Star Wars” pioneer Industrial Light & Magic — are too small to accommodate big-budget movies. Democratic Assembly member Raul Bocanegra is preparing a bill to expand their scope, but it could take months to get through committees, says his chief of staff, Ben Golombek.
And the US federal incentive, an arguably difficult-to-use tax deduction of up to $20 million per film or TV episode, is set to expire at the end of 2013.
“Once our federal incentive ends in two weeks, you’re going to have a lot of people who are going to go elsewhere,” says Hal “Corky” Kessler, a tax incentives lawyer with Chicago-based Deutsch, Levy & Engel.

Industry business leaders say they’re simply following the money.
“This is no different than any other multinational business,” says Sir William Sargent, co-founder and CEO of Framestore, a London-based special effects business that worked on likely Oscar-contender, “Gravity,” and has offices in Montreal, New York and Los Angeles. “We’re just going to where our customers are.” Even if the US moves to counteract growing incentives overseas, the efforts won’t prevent another jurisdiction from offering a bigger break.
Joseph Chianese, executive vice president at consulting company EP Financial Solutions, says the competition to offer attractive incentives is intense. More than 30 countries and 44 US states now offer tax breaks to filmmakers.
The mix “changes daily, but it’s not going away,” Chianese says. “We have now trained a generation of filmmakers and TV makers that production doesn’t have to happen here anymore.”
Specialists
Meanwhile, even as new filmmaking centers help spread Hollywood’s wealth around the world, the boost to local economies comes at a personal cost to the specialists who must follow the work. As movie production migrates from place to place, friendships get left behind and raising a family can be difficult.

But the life can be exciting for a highly skilled class of adventurers who don’t mind expenses-paid hotel rooms, restaurants and living abroad. Just ask Hiroshi Mori, a 49-year-old pre-visualization artist whose digital scene-setting work has been used in movies such as “The Avengers” and “Men in Black: 3.”
In the last several years, the US native has worked in Sydney, New York and New Mexico, not to mention Los Angeles, home of the company he co-owns, The Third Floor.
“If you’re single, it can be a great lifestyle. You’re put up in a hotel. Production pays for it. It’s fun, it’s great,” he says. “Some people love to travel, and some people don’t because of very practical reasons. But that is the reality of the business now.” Still, the uncertainty of filmmaking is compounded by globe-spanning moves every few months or years.

“One day, you might be told to travel to London or Hawaii or somewhere, and all of a sudden, a week later, everything has changed,” says Raffael Dickreuter, a 32-year-old freelance pre-visualization artist who was born in Switzerland but lives in California. “You cannot believe anything until it happens.”
The blog VFX Soldier has featured film workers’ frustrations. “We’re tired of the cycle of displacement,” says Daniel Lay, the 33-year-old hair and cloth special effects director who runs the blog. “The idea that it’s creating a sustainable industry is not true.”
Exacerbating the strain is a contract system that rewards low fixed-price bids. That can force effects houses to absorb the cost of last-minute change requests. High-profile bankruptcies, including that of “Life of Pi” house Rhythm & Hues Studios Inc. in February, point to a system gone awry. Jeffrey Okun, chair of the US-based professional group, Visual Effects Society, says his goal is to help members “live at home and have gainful employment and a thriving career,” he says. “But some of these factors are just outside our control.”

Globetrotting or quitting was the choice Tim Bowman faced. The 42-year-old compositor’s work matching live footage with computer-generated backgrounds appears in films like “The Hunger Games” and “Gravity.”
He moved from Philadelphia to Adelaide, Australia, two years ago. But work dried up in May as a capricious Aussie dollar made tax breaks less appealing. Bowman could have sought work in nearby New Zealand, likely on “The Hobbit,” or taken his wife and 15-month-old son to Singapore or Vancouver.
Instead, he moved to North Carolina, close to his wife’s parents.
“The work is awesome and I’ve met a lot of great people doing it. But the way the industry is going, it’s brutal. I don’t know how anyone can make an actual life out of it,” he says.